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11/19/1998 City CouncilBudget Workshop Special Thursday, November 19,1998, Council Meeting ELECTED OFFICIALS PRESENT STAFF PRESENT Mayor Barbara Fahey Art Housler, Adm. Services Director Gary Haakenson, Council President Doug Farmen, Accounting Manager Dave Earling, Councilmember Scott James, Accountant John Nordquist, Councilmember Paul Mar, Com. Services Director Michael Plunkett, Councilmember Ron Haworth, Fire Chief Dick Van Hollebeke, Councilmember Robin Hickok, Police Chief Jim White, Councilmember (arrived 5:40 p.m.) Arvilla Ohlde, Parks & Rec. Dir. Brent Hunter, Human Res. Dir. Greg Wean, Assist. Police Chief Jana Spellman, Recorder ELECTED OFFICIALS ABSENT Tom Miller, Councilmember Council President Haakenson called the meeting to order at 5:35 p.m. There was no specific agenda set for this Council Meeting Mr. Haakenson began the meeting with an update for the Council on the 800 Megahertz Project. He reiterated that he had asked for Council's input during the last week for their ideas on how to fund the City of Edmonds'. share of this new system for Snohomish County. He stated that he felt this expense _ would probably have some budgetary ramifications in the ensuing years. Regarding funding mechanisms, Mr. Haakenson stated that the Council was fairly evenly split. There were a couple of members . who wanted a vote of the people, there were a couple who wanted councilmatic bonds and there were a couple who were in favor of using the library bond dollars. He indicated that there was not a clear consensus and informed the Mayor that Council would continue to work on this funding issue until an answer was obtained. Mr. Haakenson explained that when the budget process was started he had a discussion with Mr. Housler as to when the Council had to pass a resolution for a tax levy. In years past it was not accomplished until .late in December. Mr. Housler indicated that would be appropriate and there was agreement to .proceed in this manner. However, Mr. Haakenson learned on the afternoon of this budget meeting, Mr. Tanaka from Scott Synder's office informed Mr. Haakenson that the Council needs to act on this tax levy before November 28, 1998. He stated that the resolution was on the Council's agenda for Tuesday night, November 24, 1998. He indicated that the Council would have to make a decision on the rate by Tuesday evening. He further stated that Mr. Tanaka expressed the thought that because this decision had been made in the past in December that the Council could possibly legally do that again but he would recommend against it. It was Mr. Haakenson's desire that this property tax levy rate decision would be resolved on Tuesday, November 24, 1998. He felt it was difficult for the Council to make a decision on a Edmonds City Council Budget Workshop Approved Minutes Thursday, November 19, 1998 Page I levy rate when the budget process was still ongoing. He encouraged the Council to progress rapidly toward budget agreement, which would help the Council be able to agree on a levy rate. He then referred to a question asked by Mr..Earling which was what would happen if the Council levied the full 6% rate but only used a portion of that rate. Could the Council then go back and retrieve the balance in the future? Mr. Tanaka of the City Attorney's Office stated that this was a possibility. Mr. Haakenson pointed out that if the Council hadn't resolved ' all of the budget issues by the Tuesday, November 24, 1998, Council Meeting, if the Council could approve the 6% rate increase, then decide how much to actually levy once agreement was obtained regarding the budget. It was his hope that direction would not have to be followed. He then asked the Councilmembers if they had any questions or statements that they would like to begin with. Councilmember Earling indicated that he would like to see the property tax levy rate in the range of 3 %. He stated that he would be more than happy to listen to any pros or cons regarding the levy rate he has indicated he would like to see approved. However, if there were adjustments to be made, indicating that I% would equal $57,000, there should be a way to go back and make adjustments something in the range of $160,000 in a 20 million dollar budget. Mr. Haakenson asked for any further comments or statements. Councilmember Plunkett indicated that he would like to address the topic of the downtown parking garage. Councilmember Plunkett stated that there were a third of the signatures needed on the LID petition and we, the people doing it, anticipate having the petition successfully completed within a couple of weeks and that these people would be coming before the Council. He stated that his group of people was looking for a dollar amount (ballpark figure) of $40,000 a year for about 20 years of councilmatic bond: He felt that because those involved would be coming to the Council had a fairly legitimate plan for the rest of the funding, the Council needed to get this topic out on the table and consider setting up some kind of account that accounts for $40,000. He continued that if the LID did not succeed, then so be it. However, if it was successful and it becomes the Council's wishes to pursue the downtown parking garage topic, since we are discussing the budget at this point, he felt the sum of $40,000 should be put into an account if the decision was.made to help fund it. Mr. Haakenson responded with a statement that as of Wednesday afternoon, November 18, 1998, the people involved had 10 signatures out of 200 and asked Mr. Plunkett if indeed they had one third the signatures which would be between 60 and 70. Mr. Plunkett stated that Karen (Wiggins — Parking Committee) was using the figure a third. Mr. Plunkett stated that he did not hear the raw numbers. Mr. Haakenson asked Mr. Plunkett if he was speaking about what Karen said yesterday (Wednesday, November 18, 1998) and Mr. Plunkett answered yes. Mr. Haakenson then reiterated that Karen (Wiggins) had 10 signatures. Mr. Plunkett again stated that Karen (Wiggins) also used the one -third figure and stated that is what he heard. He indicated that whether she (Karen Wiggins) has 10 or has 200 what if they are successful wondering if it was the will of the Council would the Council be supportive of it and does the Council not need to take into account a fund in anticipation of them being, successful. He continued if they are not, the money is in the account and available for something else. He felt the Council should consider funding this project now. Edmonds City Council Budget Workshop Approved Minutes Thursday, November 19, 1998 Page 2 Mr. Haakenson replied that because the parking garage has been discussed for quite some time and has not been before the Council as a formal topic, he asked for comments from other Councilmembers. Mr. Van Hollebeke asked Mr. Housler if the LID was successful and that the business district owners assessed themselves a certain amount of money, he had the understanding that the dollar amount was approximately $20,000 and that the business district was only attempting to raise $20,000 and bad pegged the total cost of the downtown parking garage at approximately three quarters of a million dollars and that they were pledging to raise about $150,000 in that method. He then asked Mr. Housler what the timing and cost of a councilmatic bond would be if this was used to help fund the downtown parking garage. Mr. Housler replied when you go out for a bond issue it required paperwork and one of those requirements is to have the project designed, the engineering design would be in place and after the bonds are issued, the money would be available within approximately 4 to 6 weeks from the time of the ordinance to do the bond issue. Mr. Van Hollebeke then followed by asking Mr. Housler after receiving the money for the bond when the debt would be started. Mr. Housler stated that usually semi - annual interest payments were made and at the end of the year principal and interest were both paid., Mr. Housler reiterated that in six months of receiving the money, interest would be paid, half year interest. Mr. Van Hollebeke asked if that would potentially be a 1999 expenditure and Mr. Housler indicated that expense would most likely come due in December of 1999. Mr. Plunkett stated that although this was all speculation, if it came to pass that would mean that an account would need to be set up now or take it out of something else later. Mr. Housler answered that when a bond issue is done, things such as how it is to be paid and what it should be paid from should be included in the ordinance. Mr. Plunkett asked if it would be in the 1999 budget cycle or the 2000 budget cycle. Mr. Housler stated that it would be in the 1999 budget cycle if you were planning on doing it for 1999. Mr. Housler also stated that the 1999 budget could be amended to accommodate this expenditure. Mr. Plunkett then stated that the money needs to come from some place. Mr. Earling then asked if the downtown parking garage had any potential design indicating that he had not seen one. Mr. Plunkett answered that Mr. Butterfield had a preliminary one and that he (Mr. Plunkett) heard speculation that Paul (Mar) had a design. Mr. Mar then stated that about a year and a half ago when Karen Wiggins brought it before the Community Services Committee, the Committee had asked Merritt and Pardini, the architect for the Public Safety project, to determine if it was possible to put in an underground parking complex on the northwest corner of the public safety site which is going to be surface parking. He further stated that Merritt and Pardini looked at it and indicated in the affirmative, what it would cost, and that was the only plan done. It was Mr. Mar's understanding that Mr. Butterfield has taken the Public Safety Complex plans and doesn't know to what degree Mr. Butterfield has further refined the design. Mr. Earling asked Mr. Housler, regarding the requirement of a design, if that meant final schematics ready for bid. Mr. Mar and Mr. Housler both answered in the affirmative. Mr. Mar stated that bid documents would have to be prepared to assess a truer cost.. Mr. Mar stated that the three - quarter of a million dollars was estimated a year and a half ago and indicated that figure might still be a reasonable estimate now. However, he felt because there was no concrete information prepared, to try to go on with the process would be futile. Edmonds City Council Budget Workshop Approved Minutes Thursday, November 19, 1998 Page 3 Mr. Earling stated it would be helpful to actually see a proposal. He asked if the proposal would provide some provision for maintenance. It was his understanding that the property owners were willing to contribute $150,000 and wondered if the City would, pick up the balance. Mr. Plunkett stated that the committee was looking for an LID to increase the LID, increase the in lieu (of parking fund), and hopefully get it up to about $8,000 or $10,000, to get a couple of in lieu of a year, the College has some interest, and councilmatic bonds. Mr. Earling asked what the proposal indicated the LID would generate. Mr. Plunkett gave the figure $150,000. Mr. Earling asked a year or total. Mr. Earling indicated that figure might approximate over $300,000 and then another $8,000 or $10,000 a year would come from the in lieu of parking fund which would be another $150,000. Mr. Earling asked if that were part of the proposal, could the Council take that out and give bond against it, $8,000 or $10,000 a year in hope for generating revenue out of in lieu of parking fund? Mr. Housler replied it was a Council decision where the money was coming from. Mr. Earling asked if the proposal would include maintenance of the facility wondering if that had been discussed. He further asked if it was an assumption that the City would pay the maintenance and that would be included in the City's cost. Mr. Plunkett indicated that it would be talked about now that it has not been discussed. Mr. Earling had a question for Mr. Mar asking if the neighbor's surrounding the Public Safety Complex had an idea of what they were going to see now, how would.the public process would have to be changed, i.e., what steps would have to be taken to go back and again communicate with the neighborhood to let them know how the plan would be changed. Mr. Mar replied that once the proposal is received it would'be necessary to reconstitute the original neighborhood group that was spoken to originally indicating to this group that the new proposal would contain an additional 75 or 100 parking stalls underneath the surface parking on the northwest corner of the site. Mr. Mar indicated that would be done after a preliminary design was done to see where it would fit on the site to see where the entrances to the parking would be. Mr. Earling then asked if there would be any potential neighborhood impact as far as increased traffic or safety issues that might arise from police or fire. Mr. Mar replied that it would depend on how the parking was located on the site and how police and fire are intending to use the site to respond to calls, and how they return to the site and stated that•those topics would need to be addressed. Mr. Earling stated that he appreciated all of the.work that has been done and is enthusiastic to be able to look at it but all of it makes him wonder how it would fit into the budgeting cycle and stated those were the questions that had occurred to him and he felt an answer was needed on these issues and this would be. alleviated'if the Council would see a plan. Mr. Haakenson then stated he had a few follow -up questions regarding what Mr. Earling had just spoken to. He stated that at the property owners meeting, Mrs. Wiggins had given Mr. Haakenson a paper that spoke to the project. He then asked Mr. Mar again what Merritt and Pardini indicated that estimated cost would be. Mr. Mar indicated it was approximately three- quarters of a million dollars. Edmonds City Council Budget Workshop Approved Minutes Thursday, November 19, 1998 Page 4 Mr. Haakenson indicated that was the figure quoted by the property owners group and said that the funding was based on a 5% councilmatic bond for 20 years and that would require payments of approximately $63,000 a year. Mr. Haakenson asked Councilmember Plunkett if he heard. him say that $40,000 would need to be put aside for the City's contribution to this fund on a year fund. Mr. Plunkett replied that $63,000 was the highest he had heard. He then replied that getting bogged down in the numbers would not be fruitful. At that point Mr. Haakenson politely asked Mr. Plunkett to let him finish his question to staff. He then continued if the Council was talking about putting dollars in the budget then it was very fruitful to decide what the dollars should be. Mr. Haakenson stated that Mr. Plunkett said $40,000 and indicated that Karen (Wiggins) had it broken out that the property owners would pay 20% of the cost at approximately $13,000 a year, that there was an issue of $16,000 a year by selling a minimum of two $8,000 in lieu of parking stalls for 25% of the cost and he didn't believe that the $8,000 cost for a parking stall has even come before the Community Services Committee yet. Mr. Van Hollebeke indicated that was correct. Mr. Haakenson inquired about the cost of an in lieu of parking stall. Mr. Mar indicated the amount was $4,200 for new construction and $2,100 reconstruction. He further stated that the Community College and the Christian College would kick in approximately $13,000 and that the final figure after those figures were subtracted from the $63,000 stated that $22,000 a year would be required by the City of Edmonds, the Port of Edmonds, the PUD, GTE, sales tax, RTA and Stevens Hospital which accounts for the other 35% of the costs. Mr. Haakenson indicated that he was supportive of the concept of getting more parking in downtown Edmonds but felt there was a distinct difference between $20,000 and $40,000 especially if the Council was trying to put an amount into the budget. Mr. Haakenson indicated that he was thinking along the same lines as Mr. Earling that until some of the questions raised were answered and a design plan is available, it was difficult for him to be overly supportive of the project when he doesn't have all of the facts. Mr. Haakenson then called on Mr. White. Councilmember White pointed out that the Public Safety Committee has discussed this very briefly and takes a dim view of the parking garage and unless the committee hears something different from the Police Department, they also take a dim view on the parking garage also. He wanted to make the Council aware of this view. Mr. White indicated that operation of the facility, ownership needs to be defined, and exploration of public /private partnership should be another element of the formula. Mr. Haakenson made one more comment regarding the budget process for a downtown parking garage and indicated whether the dollar amount was $20,000 or $40,000, if the Council, once it gets a presentation, decides that this is a worthwhile project that they want to pursue, thinking the Council would be able to find a way during the year, if no monies were put in a fund now, to fund it by budget amendment. Mr. Plunkett stated that he felt his point had been missed and said, "Well I think my point has been missed because Gary (Haakenson) you just answered my question." Mr. Haakenson stated, "Well then I didn't miss it." Mr. Plunkett, "What's that ?" Mr. Haakenson; "Then I didn't miss it." Mr. Plunkett stated that perhaps it had been missed, but not by Mr. Haakenson in general, that the details are not available, there is nothing before the Council. Paul (Mar) doesn't have a lot to work with, Art (Housler) doesn't have a lot to work with, and the Council has nothing to work with. He stated that he used the $40,000 figure trying to be safe and the difference between $20,000 and $40,000 was simply because a plan has not been formulated as of yet. He restated his question, "What do we do, and you have answered it Gary, what do we do if all these things work out and Public Safety can be satisfied, Councilman Earling Edmonds City Council Budget Workshop Approved Minutes Thursday, November 19, 1998 Page 5 can be satisfied and x, y, z, and four of us can be satisfied. If that time comes, what do we do? That was the only point I was trying to bring up tonight Gary and apparently your answer is satisfying to me that if we reach that conclusion, we will find a way to take care of it, regardless of what we do with the budget at this point." Mr. Haakenson asked if there were any other topics to be discussed. No one came forward. Mr. Haakenson indicated that the staff and Mayor had some presentations to be made. The Mayor did speak to the issue of code changes related to lot coverage that compounds the parking garage issue. Mr. Mar specified that this pertained to an underground parking garage and when Merritt and Pardini looked at this topic, it was an underground parking garage. She stated that there were many other things that had to be addressed and one of these was a private /public partnership indicating that the problem with that concept is that this parking was supposed to be free with no fees attached in order for it to be a viable alternative to parking on the streets and that no private entity would get any revenues from the parking garage. The Mayor then addressed the questions from the Saturday, November 14, 1998, Special Council Meeting and distributed two packets that summarized the questions raised. This packet responded to the following questions: 1. What is the impact to cities on loss of the MVET? This was explained to the Council's satisfaction. 2. Will usage remain the same if recreation fees are increased? Arvilla Ohlde, Parks & Recreation Director, responded to this question to the Council's satisfaction. The Mayor also pointed out specifics in her packet dealing with the Parks and Recreation Department's revenue and expenditures. Mr. Earling asked Ms. Ohlde to follow the user fee'issue next year and see if that was feasible sometime in the future. 3. Why are County property tax increases affecting Edmonds' residents? This was explained to the Council's satisfaction. 4. Account for more use of.the $1.3 million cash carry —over. Addressed later in the meeting. 5. What formula is Shoreline using to arrive at the amount bid to provide service to Woodway? . Fire Chief Haworth answered this to the satisfaction of the Council. 6. Wants staff to prioritize reductions of services by $400,000. Addressed later in the meeting. 7. Requests Fund 116 Y.E. project estimates for 1998. Councilmember Nordquist asked this question and it was. answered to his satisfaction. Edmonds City Council Budget Workshop Approved Minutes Thursday, November 19, 1998 Page 6 Councilmember Haakenson asked how much money was put into the fund last year and was told $120,000 and how much would be transferred to the fund this year and was given the answer of $100,000. 8. Wants Referendum 47 information from attorney by Tuesday. Mayor Fahey indicated that Mr. Haakenson spoke to the Referendum 47 topic raised in her memo. She stated that since putting the budget together, the information is new. When the budget was formulated, it was thought that if you did not use the amount you levied for property tax all at once, it would be lost. She now knows that the City may levy the full 6% but be able to assess a percentage amount one year and then go back and levy the remaining percentage amounts up to 6% at another time. Mr. Mar made a presentation clarifying the fees for Planning for 1999. Mr. Earling asked for feedback from the Community Services Committee (Councilmember Van Hollebeke, Chair, and Councilmember Plunkett). Mr. Plunkett indicated that he was more comfortable with the implementing of these fee increases after speaking to a number of members in the business community, architects and developers in the community and stated that he could go ahead and support the full increase. Although he would like to see this implemented in steps, if it is the will of the Council, Mr. Plunkett would not oppose it. Mr. Van Hollebeke indicated that the fee increase has not seemed to upset the property owners or builders that the committee has talked with. Mr. Van Hollebeke indicated at a property owners meeting the reaction was neutral. He then asked Mr. Mar to speak to the issue. Mr. Mar stated that the question was asked if this was going to impact the building permit and the response was no because those had been dealt with and the average increase that was proposed on that would be brought forth in a resolution either next month or earlier January and those are in the 10% to 15% range. He indicated this was a one time thing, a corrective action based on a policy change. Mr. Haakenson asked that staff review these'fees on a yearly basis so the City does not have to play catch up for fees. Mr. Mar said that the staff had agreed to a yearly review. Mr. Van Hollebeke also stated that the Community Services Committee would like to see these reviews on a yearly basis. He indicated that when speaking with Mr. Ray Miller, the new Development Services Director, Mr. Miller indicated that was also his normal policy. Mr. Haakenson asked Mr. Mar if he needed some action from the Council regarding these fee increases. Mr. Mar indicated that it would be brought forward to the Council in the form of a resolution with Engineering, Building, and the discretionary Planning fees. Mr. Earling asked for clarification on the Planning fee increases and was directed to Exhibit 4, which showed the fee increases. Mr. Earling indicated that although these fee increases had a direct impact on the builders and developers, which all sounded fine, stressing that the home owner is really the one who pays for it when a house is purchased. Mr. Earling wanted to know what the increase in revenue to the City would be and Mr. Mar indicated it would go from approximately $16,000 to $32,000. Mayor Fahey wanted to clarify that this increase went hand in hand with the recommendation from the Human Resources Committee. Edmonds City Council Budget Workshop Approved Minutes Thursday, November 19, 1998 Page 7 Mr. Mar interrupted at that point to clarify that the Human Resources Committee recommendation was for the increase in Building fees. The issue they were discussing was discretionary Planning fees, which was the third category. He pointed out that there were three categories: (1) Engineering fees which were basically agreed to in the September meeting, (2) Building fees which at the November 10, 1998, meeting, the Committee concurred that adding the staff and increasing the fees were two actions which were budget neutral so that is going forward and incorporated them in the budget; and (3) as Mr. Mar understood it, the discretionary Planning fees will be brought forward to the Council in the form of a resolution. The Mayor commented that all of those fees will be built into the final budget and Mr. Mar agreed. The Mayor then went on to explain the 9.1% differential between the 1998 and 1999 budget expenditures referring to her letter with attachments to the City Council dated November 19, 1998. She clarified that the increase for the 1999 budget is due to all new costs. Mayor Fahey then asked Mr. Mar to explain the expenditure increases between 1998 and 1999 for the General Fund. Mr. Mar explained these increases and referred to Mayor Fahey's November 19, 1998, letter (Exhibit 3) to the Council's satisfaction. Mayor Fahey commented that if the Council had no questions regarding Mr. Mar's explanation, the City had about 1.5 million dollars (round numbers) in increases for things that were absolutely not in the 1998 budget and the remainder are increases which equate to about 1.8% increase to the cost that were an integral part of the 1998 budget. She further explained that when the question arose about what happened to the cash carry over, it was used to pay the 1.5 million dollar increase. She then referred to Attachment 6 in the 1999 Preliminary Budget Book, stating it shows the new revenues coming into the City for next year with a 6% property tax increase estimated to be $752,270. She explained that of that amount $725,000 is in the property tax line and that the other revenues offset each other, i.e., for every increase in another revenue, there is a decrease in a revenue line some place. She stated that it was unfortunate but the City almost has a neutral situation when you look at all of the other revenues coming into the City and the only solid, concrete, new revenue that is coming in that can help cover all of the costs of the budget is the property tax line. Mayor Fahey explained the cash carry over to the Council's satisfaction and by saying part of the carry over will pay for items that were budgeted for in 1998 (approximately $100,000) but will be carried out in 1999. The cash carry over balance would then be approximately one million fifty thousand dollars when those items were paid. This was the amount left over with which to work in conjunction with the new revenues in order to cover all of the expenses that are in the budget. The Mayor then discussed the implications of less than 106% property tax increase. The Mayor stated that as the administrator and CEO of the City of Edmonds if the Council wants to cut property taxes, that's perfectly fine with her and she would follow their direction making cuts wherever Council feels they are appropriate. She pointed out that the budget was put together on the basis of all the decisions that this and previous Council's have made and felt that to continue the status quo, it was going to take the 6% property tax increase. She continued if the Council wants to lower the property tax assessment, then the Council has to decide what decisions are going to be changed and then she will follow Council's direction and implement them as a part of the budget. She then said she was not about making arbitrary decisions that overrule the decisions that the Council has made but is trying to cover the costs of all of Council's past and present decisions in the 1999 budget. Edmonds City Council Budget workshop Approved Minutes Thursday, November 19, 1998 Page 8 She then referred to page 4 of her November 19, 1998, letter explaining potential cuts from the budget which will lead to a 7% increase instead of 9% for the 1999 budget. She covered -transfer cuts, cost center cuts, staff reductions, and modifying Council decisions. Mayor Fahey offered another scenario of taking in property taxes in I% increments and explained what that would entail. She then explained the revenue projections and ending cash balances referring to her letter of November 19, 1998, (Exhibit 5). She explained that revenue projections are conservatively based so that these projections will be fairly accurate and may even come in at a higher rate. Mayor Fahey ended stating that she had tried to lay out all of the options and would follow the Council's direction and would implement any decisions that the Council makes related to the budget. She wanted to go on record saying that her objective is to try to do her very best as she promised the citizens, would do everything she could to maintain the quality of life in this community, and cannot abdicate for reducing revenues to the point where the City would have to do anything that would constitute diminishing services. Mr. Haakenson thanked the Mayor and staff for the packet and the explanations contained therein. He stated that the 1.7 million dollars in expenditures was made much clearer by the information given to the Council that evening. Mr. Plunkett congratulated and thanked the Mayor for her report. Mr. Plunkett then questioned Art about the amount in the Emergency Reserve Fund explaining that he understood there was $270,000 beyond what the industry standard encourages. Mr. Plunkett wondered if that was correct. Mr. Housler replied there were two perimeters, the low end which is 5% and the high end which is 8% explaining that the City ranged about in the middle at about 6 to 6 'h% over the years. He indicated if you looked at the 5% level it would be about the amount Mr. Plunkett indicated. Mr. Plunkett stated that the $270,000 sits in that account, doesn't pay for a fireman, doesn't pay for a policeman, it just sits in that account. Mr. Plunkett again asked Mr. Housler for clarification. Mr. Housler indicated by a yes nod of his head. Mr. Plunkett continued that in a memo received at the November 14, 1998, Saturday Council Budget Workshop, Mr. Housler referenced additional property revenue that Mr. Housler is now aware of, new projections from the County. Mr. Plunkett stated that he believed that was $74,300. Mr. Housler said that was correct. He asked Mr. Housler if that money was accounted for at this time. He asked if the Council had approved an expenditure of any kind. Mr. Housler indicated that the Council had not also indicating that the City has not yet received those monies. Mr. Plunkett indicated the total of those two amounts was $344,300. He then stated if the Council did not increase the property tax one penny, not 3 %, not 6 %, 0 %, the budget would have to be cut in the amount of $341,000. Mr. Housler indicated that was a correct assumption. He followed with the statement that the City of Edmonds has $344,300 in existing funds that are not paying for anything in public safety and $341,000 in property tax increase. Mayor Fahey then added a postscript to Mr. Plunkett's comment as a clarification stating that the monies that Mr. Plunkett was talking about, i.e., the property taxes in the amount of $74,000. The Mayor then clarified that amount makes up part of the $109,000 that was previously mentioned. She then stated that if Mr. Plunkett was to do what he was proposing then that actually would not be quite enough to cover those two new expenses. Edmonds City Council Budget Workshop Approved Minutes Thursday, November 19, 1998 Page 9 Mr. Plunkett stated that was correct but then asked Mr: Housler if he understood that the Mayor made it clear that revenue above and beyond what is projected is.at least at 109% and history would encourage one to believe that the above and beyond revenue increases were over the course of the year.. Mr. Plunkett asked if he understood that correctly and received an affirmative answer from Mr. Housler and reiterated again that the money comes in over the course of the year. Mr. Housler indicated that was generally sales tax revenue. He also asked if he was correct that over the years the Council usually spends that money in some fashion. Mr. Housler answered that the next year or year after because the cash carry over is considerably high and that it was budgeted for the next year. Mr. Plunkett asked if it could be used over the course of the year in which it was received. Mr. Housler said yes. The Mayor indicated that the Council had done that on a couple of occasions in 1998. She pointed Mr. Plunkett to the preliminary budget book (1999) which showed the budget adjustments that were made . during the course of 1998 where the Council approved new expenditures that where not a part of the budget and used new revenues that were unanticipated as the funding mechanism for those. She clarified that the Council could. allocate new revenues that had not been budgeted to any use that the Council, deemed fit during the course of the 1999 year. Mr. Plunkett thanked Art and the Mayor for the explanations. Mr. Earling then. asked Mr. Housler how much interest was generated by the Emergency Fund account every year. Mr. Housler answered that it was approximately $60,000. Mr. White touched on the Court portion of the budget and indicated that the revenue increases were at 6% and he was told that the Court was anticipating a 40% revenue increase because ,of certain changes that have been made. He felt that needed to be looked into and reflected in the 1999 budget. Mr. White also had a question about the Prosecuting Attorney's budget and it was answered to his satisfaction. Mr. White also questioned the jail budget and heard that the City could expect about a $12,000 reduction in the jail budget because of a community services program that had been implemented. Assistant Police Chief Wean indicated that he hasn't seen any paper work that would absolutely indicate . that would be forthcoming. Police Chief Hickok indicated that the amounts in the jail portion of the budget were not firm because of.' unanticipated costs which could not be pinned down until January 1, 1999. Mr. Plunkett asked Mr. Housler when equalization was going to be whole again, if ever. Mr. Housler' stated that was in the budget for the year 2000, which would amount to approximately one million dollars. For the year 1999, the amount is approximately $472,000. Mr. Earling asked Mr. Housler to clarify his budgeting process for the year 2000/2001 in which' Mr. Housler had indicated there would be a downturn in the economy and explained that he had indicated 1 those categories at the Saturday, November 14, 1998, Council Meeting. Mr. Haakenson asked if there were any further comments from staff. Mr. Haakenson then asked for comments from the audience. Mr. Dale Hoggins urged the Council not to be fearful of the property tax rate increase and stated that the rates have not gone up as the citizens might sometimes think. Edmonds City Council Budget Workshop Approved Minutes Thursday, November 19, 1998 Page 10 Mr. Haakenson then inquired if there were any more questions for the staff from the Council. He then indicated that the members of the staff could leave the meeting. The Mayor then asked the Council if they needed any more information from the staff before the next budget process. Mr. White indicated that he wanted answers to the questions he had previously asked. Mr. Haakenson then excused the staff. He then instructed the Council that he would like to move forward so the Council would be able to come to a consensus regarding the property tax levy increase stating that on Saturday Mr. Plunkett indicated that he might have something in writing that he (Mr. Plunkett) would share with the Council at this meeting. He asked the Council how they would like to proceed with the budget. Mr. Plunkett stated that he didn't have anything in writing. He indicated that since Mr. Earling had stated being in favor of a 3% increase, Mr. Haakenson asked the Council if they would like to discuss it. Mr. Earling stated that he did not intend to make the motion during this meeting this evening. He felt it should be in one of the general Tuesday night meetings. Mr. Van Hollebeke agreed. Mr. Haakenson stated that he was not looking for a motion and not looking for a suggestion but thought that it needed to be discussed and have the Council determine where they wanted to go. Mr. Van Hollebeke expressed his views regarding the Mayor's explanation and was leaning toward the maximum increase (6 %) by vote but not budgeting for the maximum increase. Mr. Haakenson confirmed that Mr. Van Hollebeke wanted to reserve the right to come back at some future point to assess whatever figure is necessary if a dire situation arose and it was needed. Mr. Plunkett asked Mr. Van Hollebeke about the additional monies for sidewalks that Mr. Van Hollebeke was advocating be put into the budget. Mr. Van Hollebeke stated that the Mayor made special note of the fact that if the Council wishes some, or all of the difference of $270,000 could be used to help costs of unmet needs such as additional road resurfacing or walkways and he indicated that he was thinking in terms of those monies. The Mayor clarified that amount ($270,000) was the current excess in the Emergency Reserve Fund over and above the 5% that is needed to be maintained in that fund to keep up the City's good rating. The Mayor stated that Mr. Plunkett was wanting to use that amount as an offset. Mr. Plunkett indicated that he was but he wouldn't support using that $270,000 for that but the thought came to mind because Councilman Earling demonstrated that there was $60,000 in interest earned in that as well and that would also be above and beyond the 5 %. Mr. Earling wanted clarification on how much interest the Emergency Reserve Fund was accruing this year. The Mayor stated that the average was about $60,000 in interest on it each year because of the balance in that fund. She further clarified that because of the interest accumulated over the years, the Edmonds City Council Budget Workshop Approved Minutes Thursday, November 19, 1998 Page 11 fund now has the $270,000 differential. She explained that if you use that money in lieu of property taxes for this year, it will not be available for next year and would then start accruing $60,000 each year in interest that could be designated into a sidewalk fund of whatever you wanted but next year that amount would have to be found from some other source. Mr. Earling remembered that in 1994 a modification was made in a new ordinance that said that fund was to be used in emergencies only. He implied that he couldn't recall the exact language but the inference was for emergencies. He stated that the City Attorney would have to clarify as to whether anything the Council has talked about constitutes an emergency or whether even the interest could be used. Mr. Haakenson asked Mr. Mar to have Art Housler check on the language for the use of that fund. Mr. Nordquist stated that he spoke to Mr. Housler on this matter, and he indicated that the $60,000 in interest could be used. Mr. Haakenson repeated that the interest may be used but not the balance. Mr. Plunkett asked if they were speaking about the amount above the requirement or the whole thing. Asking again if they were talking about just the requirement and. $270,000 above the requirement or just about the requirement. Mr. Earling stated that although he didn't remember the full language of the ordinance but did remember the ordinance being more clear in saying that it was for emergency purposes. Mr. Haakenson wanted to understand Mr. Nordquist's statement and repeated that the principal could not be used but the interest could be spent. He asked if you could spend the yearly interest or the accumulated interest. Mr. Nordquist indicated that the yearly interest could be spent. Mr. Plunkett then stated that they didn't know about requirements and the money above and beyond the requirements. He then stated there is a requirement, "x" amount has to be in there. Mr. Nordquist stated that it was after the requirement - $60,000. Mr. Plunkett then stated there was $270,000 after the requirement, plus $60,000 in interest. Mr. Nordquist again stated that it was the $60,000 that could be used. Mr. Haakenson made a final clarification that the total amount above the requirement was $270,000 and $60,000 of that was this year's accumulated interest and could possibly be used. Mr. Earling asked for more clarification regarding spending any money out of the Emergency Reserve Fund. Mr. Earling stated that he would be comfortable spending $60,000 but because the fund had an extra $200,000 he could think of a couple of instances where the Council could have talked about emergencies in the last few years and even in those circumstances chose not to. He stated that he sometimes becomes a fiscal conservative and doesn't mind having a couple of hundred thousand dollars extra for some sort of a major event that may need to be addressed. Mr. Mar indicated that staff would give the Council an answer in writing for the Tuesday night meeting. Edmonds City Council Budget Workshop Approved Minutes Thursday, November 19, 1998 Page 12 Mr. Van Hollebeke stated that he would like to see programs that encourage visitors to the City of Edmonds kept in the program. He gave the Flower Program as an example and felt that drew people to the City during the spring and. summer months. There was a general consensus from the Council to keep the Flower Program intact. Mr. Earling stated that as to what he had heard so far, that there was no reason to wring hands yet, because the only proposal he has heard so far is that we might have to cut 3% of the budget and he hasn't heard anyone speak to the contrary. He then asked if there were any other Councilmembers that had bigger numbers other than Mr. Van Hollebeke and Mr. Plunkett who wanted to figure out a way to put a few more dollars into the sidewalk program. Council President Haakenson stated that it would equate to a $171,000 cut from the budget, not including the revenues that the Mayor talked about minus the Marina Beach Lease which would take it down to $104,000 and then still with sidewalks to be worked out. Mr. Plunkett then stated for clarification that his numbers were higher. He stated that his were at $344,000, a surplus of $270,000 above and beyond in the financial reserve and the $74,000 free additional revenue offset by zero in a property tax increase. Gary Haakenson repeated that he thought he heard Mr. Plunkett would suggest no property tax, a zero rate. Mr. Plunkett stated Mr. Haakenson was correct. Mr. Haakenson continued that he heard Mr. Plunkett would like to cut $344,000 out of the 1999 budget in addition to that. Mr. Plunkett answered yes. Mr. Haakenson indicated that would be about $511,000. Mr. Earling stepped in and indicated that he heard Mr. Plunkett saying he would like to add the extra in the Emergency Reserve Fund ($270,000), plus the additional funds ($74,000) that have come to light during the last week. Mr. Plunkett stated that was correct. Mr. Haakenson then reiterated $270,000 and $74,000. Mr. Plunkett answered yes, into the budget saying that he was not suggesting that any programs or flowers be cut. Mr. Haakenson indicated that the difference between 6% and $344,000 is negligible. Mr. Plunkett indicated that it was about $2,800. Mr. Nordquist asked what a moratorium on hiring for about six months would result in dollars. Mayor Fahey indicated that if the other police officer was not hired, a position that the City is currently trying to fill, that would be a ballpark figure of $65,000 a year plus some ancillary non - salary benefit expenses. So if it was delayed for about six months, approximately $32,000 to $33,000. Mr. Nordquist asked if that was the only new hire being projected for next year. The Mayor answered that was the only new position at the moment that the City was planning to fill except for the ones that are being added in conjunction with permitting fees which are offset positions. The Mayor indicated that other options would be to not hire the seasonal help. Mr. Nordquist stated that the salaries and benefits portion of the budget seemed to increase dramatically for 1999. He made the comment that in years past the number of directors in the City of Edmonds was smaller but has escalated. In speaking with Mr. Housler, Mr. Nordquist indicated that unless the Council went for the 106% property tax levy increase, the projections would have to be redone. Edmonds City Council Budget workshop Approved Minutes Thursday, November 19, 1998 Page 13 Mayor Fahey and Mr. Nordquist discussed this further with Mr. Nordquist stating that the cash carryover for one of the years was somewhat frightening because it was around $80,000. He continued that he would not like to raise property taxes but the consequences of not raising taxes would be troublesome. Mr. Haakenson then asked Mr. Nordquist if he was suggesting that the Council settle on 0% or 3 %, declare the need for the 6% but not assess the full amount so the Council has the ability to go back and retrieve the remaining percentage at another time if Mr. Housler is basing his projections on the 6% all the way out. Mr. Nordquist asked for clarification regarding a time when back taxes could be retrieved when the whole percentage wasn't taken (reclaim back a couple of years). Mr. Haakenson stated that was in 1993. Mr. Nordquist asked if that was still feasible. Mayor Fahey spoke up and said that those tax dollars were not available and the City could not go back and reclaim the 3% that was "left on the table" during those years once Referendum 47 passed. The Mayor stated further that if a resolution was done that stated there was a known need for the 106% property tax levy, the City could then go back and reclaim the unused percentage. She clarified if the . Council passed a resolution for a 103% property tax levy, the Council could not reclaim the other differential. The Mayor then clarified how the formula worked for reclaiming the percentage amounts if the Council levied a 106% property tax levy but did not use the full amount the first year it was assessed. Mr. Nordquist stated that he wants to make sure the budget is addressing the problems of the citizens regarding the parks. The Major commented she felt Arvilla Ohlde, Parks and Recreation Director, was doing a very good job as park steward. The Mayor pointed out that the three critical items that the City does not systematically address and provide funding for are: better repairs and replacements of roads; the next is the walkway plan, and the last item is a strong reserve fund to address maintenance of the capital investment that is made of the City's buildings stating there was not a "nickel" in the 1999 budget that is being allocated into a fund for long -term, major capital improvements, and repairs to any of the facilities. She stressed that those were the three unmet needs she could define that are not built into the 1999 budget. Mr. Nordquist followed her comment by stating that he was relying on Mayor Fahey as a representative of the citizens that if there are needs to be met, they should be addressed; if they haven't been addressed, they should be brought to the Council for consideration. Mr. Nordquist specifically pointed out building repairs. The Mayor answered stating that in order to do what Mr. Nordquist was talking about, there would be no question but to levy a 106% property tax to cover the various expenses that are in the basic budget with all of the increases and then rather than allocating the differential in the emergency reserve fund excess or interest to offsetting property taxes this year so they will not increase, you utilize those funds to address an extension of one of the above - mentioned needs, like for the sidewalks or some of the roads that need repair or rebuilding. She mentioned using the Library Bond once it was paid off but indicated that it was the Council's decision. Mr. Haakenson inquired as to when the Library Bond would be paid off and was told the year 2000 and indicated that he didn't feel it was a good idea to start earmarking those funds until that budget year was closer. He stated that was his personal standpoint and he did not want to do it that way. Edmonds City Council Budget Workshop Approved Minutes Thursday, November 19, 1998 Page 14 Use of the Library Bond was briefly discussed. Mr. Earling asked how the Council would like to see the 800 Megahertz Project funded and if it was feasible to use the Library Bond funds after it was paid off. He said that this project was going to cost about $161,000 per year and asked how the funding problem was going to be resolved. Mr. Haakenson stated that because of the few meetings he has attended regarding this project, he felt that from a public safety standpoint this project needed to be done. He felt the City needed to pay for it and to have a plan in place was a laudable idea. He discussed funding alternatives and asked the Council how they would like to see this project funding. Mr. Earling stated that he would rather not go out and ask the citizens to spend the money for the vote, have the vote fail and still have to pay for the vote indicating that he would like to find a different way to pay for it. He continued that he would rather fmd a series of potential creative ways to pay for it rather than go out and seek another taxing authority from the voters. He indicated that he would rather take the monies out of the excess emergency fund reserve to fund an issue like the 800 Megahertz Project feeling that it comes a lot closer to an emergency. He suggested if the Council were looking at the 3% property tax levy to balance the budget, maybe it would then consider levying an additional 2% dedicated to the payment of some portion of the $161,000. He made other suggestions of ways to fund this project and again stated he did not like the idea of going out and levying another new tax on the taxpayers. He stated that in attending various meetings it had become clear that there are people who have been in serious trouble who could not access the radio system, i.e. police officer, bus driver, etc. Mr. Haakenson clarified by saying he heard Mr. Earling state that he would like to levy a 3% property tax increase to balance the budget and then approximately 2% for a total of 105% to help pay for the 800 Megahertz for 1999, leaving 1% on the table which would give the Council the ability to levy a 105% or 106% property tax increase. Mr. Earling stated that he was not clear yet whether he would vote for the 106% then use the 3% to balance and use the 2% dedicated to the 800 Megahertz Project. He indicated that for the next 15 years the Council would have to figure out how to pay for the project but felt that it was not appropriate to go to the public and ask for another new tax. Mr. Nordquist raised some questions about public safety issue funding and Mr. Haakenson indicated that was a very good topic to be discussed at the approaching Council Retreat. Mr. White had questions regarding the reasons the City was going to 800 Megahertz. The Mayor and Council President answered the questions to Mr. White's satisfaction. However, the Mayor did point out that if everyone else switched to the 800 Megahertz system, the City would incur costs connected with keeping the present system in place and that eventually the City would be required to use the 800 Megahertz system and would then have to pay fees for joining the system late. Mr. White agreed with Mr. Earling about not levying another tax upon the taxpayers for this project and said he felt comfortable considering a 106% property tax levy with a dedicated 2% and budgeting for something less than around 103 %. Mr. Earling asked Mr. White for clarification on his statement regarding the property tax levy saying that he heard Mr. White say he is considering doing the 2% dedicated, doing the 106% without budgeting it all but to do the 3% plus the 2 %. Mr. White agreed that was correct. Edmonds City Council Budget Workshop Approved Minutes Thursday, November 19, 1998 Page 15 Mr. White further stated that he felt it was irresponsible to approve less than the 106% property tax levy feeling it might not be necessary to spend all of the funds levied immediately but those funds possibly would be needed for the next couple of years feeling the Council would box themselves in if the Council doesn't allow for the maximum 10 years from now. Mr. Plunkett referred to the $320,000 that would become available when the City is no longer involved with the Library Bond wondering if that would cover 80 to 90% of both the fire apparatus and the 800 Megahertz. The Mayor asked Mr. Plunkett if he was saying that when the City of Edmonds is no longer paying that (Library Bond) money, the City will have $320,000 to work with and would that not cover say approximately $160,000 for the 800 Megahertz and the fire apparatus. She stated that it would and that basically that money would be able to fund those items. Mr. Plunkett then stated that the City has a funding mechanism for most of it for most of the years. Mr. Van Hollebeke stated that he agreed with Mr. White that the Council would be foolish and short- sighted to ask for less that the 106% property tax levy amount and is comfortable with the idea of budgeting as Councilmember Earling stated, i.e. 103% plus 2% set aside or dedicated (if that is a legal feasibility). Again, he stated that he felt the Council should go for the 106% authorization. The Mayor stated that she needed to ask one critical question relating to information that she needed to have for Mountlake Terrace on November 20. She wondered if the City would be looking toward taking a vote out for the 800 Megahertz Project that Mountlake Terrace was taking out a vote and they are trying to find out who else would be taking out a vote. Lynnwood has made up their mind but would be predisposed to do that if Edmonds is. She indicated that she sensed that the Council was leaning towards . not going out for a vote and finding another funding mechanism. Council President Haakenson said that he believed that he heard a consensus that most of the Council would prefer to either pay for it with a 2% property tax increase out of the tax percentage levied or pay for it out of the proceeds that were received after paying off the Library Bond. The Council agreed with Mr. Haakenson that his statement was consistent with the Council's feeling regarding a vote for the 800 Megahertz Project. The Mayor also stated that she was in support of finding another method of funding the 800 Megahertz Project rather than going out for a vote. Mr. Haakenson asked Mr. Plunkett if there was any need for the staff to come back and talk about any budget because of Mr. Plunkett's funding mechanism (funding out of other areas), there would be no budget cuts. However, from Mr. Earling, he heard the amount of 103% vs. 106% property tax levy increase, which would be a budget cut of $171,000. He then asked how the Council would like to approach those cuts, i.e., having the staff or the Mayor come back and recommend suggested areas to cut. Mr. Earling suggested that the Council would look to the Council President between this evening and next week to poll the Council regarding the proposal brought forth. Mr. Haakenson stated that he would be looking for guidance from the Council as to where to cut $171,000. Mr. Nordquist left the meeting at 8:25 p.m. With no further business, the meeting was adjourned at 8:35 p.m. .,/. ex,__ BARBARA S. FAHEY, M OR SANDRA S. CHASE, CITY CLERK Edmonds City Council Budget Workshop Approved Minutes Thursday, November 19, 1998 Page 16